White collar crime specialist discusses swell in ethics prosecutions

The past few years have been marked by a crackdown on violations of ethics rules, and an expansion of ethics regulations to encompass contractors working in federal roles may be in store, a former Justice official specializing in white collar crime said Tuesday.

Joshua Hochberg, a partner at the Washington, D.C., law office of McKenna Long & Aldridge and a veteran director of public corruption and corporate crime issues with the Justice Department, led a forum that delved into ethics issues in government.

Hochberg said public attention to ethics problems tends to follow a pendulum's arc, and the current swing toward increased scrutiny can be seen in highly publicized corruption cases such as the wide-ranging investigations and trials surrounding Jack Abramoff, and partisan investigations originating on Capitol Hill. There is a new crop of prosecutors with on-the-job training from Enron-related accounting scandals, Hochberg noted.

Increasing use of task forces that bring together civil and criminal investigators from multiple Justice offices has changed the lay of the land in ethics cases in the past several years, Hochberg said. Task forces pool information on potential violations, let officials share novel techniques, and encourage competition among offices vying to take leadership of investigations, he said.

The recent ethics cases also have been marked by increased use of laws related to false statements, obstruction of justice and perjury, Hochberg said. Those laws are often invoked when prosecutors cannot pin down charges for more specific crimes, he said, as in the case against David Safavian, former head of the Office of Management and Budget's procurement policy shop. Last June, a jury found Safavian guilty on four counts of lying and obstructing investigations in relation to a golfing trip he took with Abramoff to Scotland.

Hochberg said more rules could lie ahead to address the increased use of contractors in roles previously filled by government employees. Federal workers are subject to ethics rules that their private sector counterparts are not, sometimes raising difficult questions.

As an example, Hochberg pointed to a recent case in which the General Services Administration sought to hand off some audit work from the inspector general's office to contractors. Observers raised concerns that the companies could have conflicts of interest, for example as competitors of the companies they were assigned to review.

"The issue is as you privatize, are you just going to contract out more things? Or are you really trying to delegate … a government function, and to that degree, do you really need to place more restrictions" on the contractors, Hochberg asked.

Paul Denett, the current procurement chief at OMB, attended the presentation, explaining that he tries to keep abreast of such discussions. Denett is a key champion of the administration's controversial campaign to open more federal work to contractors. At one point, another audience member pressed him to respond to questions on outsourcing.

Denett said the Office of Government Ethics has done some work on the question of whether more regulations are needed for contractors, and that if lapses stem from a shortage of federal acquisition specialists, more would be hired. He said he was "encouraged" by the successful prosecutions of officials under existing law, taking those as signs that the system is working.

Describing another area ripe for increased scrutiny, Hochberg said uncertainty over the government's responsibility for indirect spending could also be the subject of new regulation. As an example, he cited confusion over who is ultimately responsible for funds the Coalition Provisional Authority, which governed Iraq during 2003 and 2004, turned over to Iraqi ministries. In the most widely publicized such case, lawmakers have tried to find out what happened to about $10 billion in Iraqi oil funds during that period.

Hochberg said it would not necessarily take a new, high-profile ethics violation to spur such rule changes. The current spate of congressional hearings on waste, fraud and abuse could provide the impetus, he said.

For federal employees negotiating the tricky terrain of post-government employment restrictions or facing inspector general inquiries, he said, the best course of action is to get good legal advice.

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